Explanatory notes

The outbreak from time to time of virulent diseases can have significant implications for ship owners and operators. This might include quarantine of a vessel and crew in an area where the disease is prevalent as well as the imposition of restrictions, possibly weeks or months later, in ports remote from the infected region as a precaution against the disease spreading further.

The Novel Corona virus is the latest outbreak of a series of contagious disease that may impact shipping operations. In 2015 it was the Ebola virus and 10 years before that the Severe Acute Respiratory Syndrome (SARS) that caused similar concern. It is likely that equally serious strains of existing, or newly identified, diseases will occur from time to time. For this reason BIMCO has chosen to develop a set of comprehensive and clearly worded generic clauses for voyage and time charter parties that can be applied not only to the Novel Corona virus outbreak but to other similar virulent diseases that may occur in the future.

BIMCO is grateful to the following members for their work in the development process:

• Mr Jean-Pierre Laffaye, Cetragpa, (Chairman) (Owner)
• Ms Nicola Cox, (West of England P&I Club)
• Mrs Philippa Langton, (UK P&I Club)
• Mr Frank Riley, (Skuld P&I Club)
• Mr Richard Stevens, (The Standard P&I Club)

General principles

The clauses have been developed for use in response to any virulent disease and therefore drafted in general terms without reference to specific conditions. The provisions are intended for application only in the most severe cases. A high threshold has therefore been inserted so that the triggering mechanism will take effect only in instances of extreme illness and cannot be misused for commercial purposes in relation to more commonly encountered or widespread viruses. Given the potential for ambiguity and lack of clear meaning, the term “epidemics” has been avoided both in the heading (the provisions are called the “Infectious or Contagious Diseases Clause”) and in the definition of disease.

The content and structure has been modelled on the BIMCO War and Piracy Clauses where, within limitations, owners may refuse to trade to an area or zone of danger. If, nevertheless, that option is waived and the vessel proceeds, charterers will be responsible for resulting liabilities and any additional costs of preventative measures taken by owners to protect the vessel and crew. It is important to note that whether an area presents the degree of danger justifying a refusal to proceed is a subjective decision to be taken by owners in the light of available evidence and information.

Under the time charter party clause, and recognising charterers’ commercial control over the vessel, charterers’ obligations are expressly stated to include post contractual costs such as cleaning, quarantine or fumigation arising from the vessel’s previous trading pattern. In this respect and in order to secure their interests, owners will need to consider the most effective means of obtaining appropriate financial guarantees either at the time of fixing or when agreeing to allow the vessel to proceed to an area considered to be at risk.

The voyage charter version expressly limits application of the clause to situations arising after the date of the charter party. This is because parties should know about events that arise prior to or during negotiations and make appropriate arrangements accordingly. Events arising post-fixture may be more problematic and so the clause sets out a regime to address such changed circumstances.

The provisions in the clauses might result in contractual or geographic deviation. Accordingly, when considering incorporating the clause, owners and charterers should consult their respective P&I Club to ensure that inclusion will be compatible with their cover and also to discuss any special considerations or requirements that might be applied.

Main features of the Infectious or Contagious Diseases Clauses

1. Time Charter Party Clause

Sub-clause (a) This sets out two interdependent definitions to trigger the clause. The first, “Disease”, is drafted with closely defined criteria to fulfil the provisions of extreme circumstances of sickness and not everyday occurrences of illness. The second definition, “Affected Area”, may be a port or place that the ship visits where there is a risk of infection to the crew; and/or a port or place which leads to the ship and crew being at risk of quarantine or subject to other restrictions. To fulfil the requirements of the definition “Affected Area” it is sufficient if one of these risks is prevalent.

Risk to the crew: There needs to be a high risk of exposure to COVID-19. It is not sufficient that a risk of exposure to COVID-19 as such exists – the risk must be comparatively high. That means that not all ports or places around the world will be considered an “Affected Area” for the purpose of the clause. It also means that one must evaluate the particular circumstances in the port or place where the ship is being ordered based on all available sources of information.

Risk of quarantine or other restrictive measures: The second part of the definition of “Affected Area” refers to any port or place where quarantine or other restrictions are imposed. This could mean the same port where a risk of infection exists, or another port where restrictions may be imposed on a ship as a result of it previously trading to a port where there was an infection risk.

The purpose of the definition of “Affected Area” is to create a trigger for owners to invoke the clause where they judge that the ship will either be at risk of exposure to infection or at risk of being delayed as a consequence of related restrictions at a port.

The ability to trigger the clause will be dependent on the factual circumstances in each case – something that the owner must properly evaluate and determine based on information available at the time.

Sub-clause (b) It is for owners/master to determine, on the basis of “reasonable judgement”, whether to allow the vessel to proceed to, continue to or remain at an Affected Area although, as with the war and piracy clauses, the level of danger must be real and significant.

Considerations to be taken into account when deciding whether to proceed would be likely to involve making background inquiries and seeking guidance from relevant sources which could be expected to include regulatory or advisory bodies in the owners’ Flag State as well as reference to guidance issued by specialist intergovernmental organisations, such as the World Health Organisation (WHO). The vessel’s subsequent trading pattern might also influence the decision.

Sub-clause (c) The owners must notify charterers if they decide not to proceed or continue towards an Affected Area.

Sub-clause (d) If already at a location that becomes an Affected Area, and provided charterers are notified, the vessel may leave with or without cargo.

Sub-clause (e) This requires charterers to issue alternative voyage orders within 48 hours of owners’ notification, under sub-clauses (c) or (d), that the vessel will not
proceed to, continue to or remain at an Affected Area. 

If such alternative orders are not given, any cargo already on board may be discharged at any port or place. The vessel will remain on hire throughout with charterers responsible for all resulting costs and liabilities.

Sub-clause (f) owners are under no obligation to load cargo or sign (and charterers may not sign or authorise) bills of lading, waybills or other documentation evidencing contracts of carriage for any Affected Area.

Sub-clause (g) charterers must indemnify owners for costs and liabilities, including claims from third party bill of lading holders, resulting from delay awaiting or complying with charterers’ alternative orders in accordance with sub-clause (e).

Sub-clause (h) addresses the position where a vessel is nevertheless permitted to proceed to an Affected Area. In such event, owners do not waive their contractual rights; owners must endeavour to take reasonable precautionary measures in accordance with World Health Organisation (WHO) recommendations; and the vessel remains on hire with charterers also responsible for any additional cleaning, fumigation or quarantine costs.

Sub-clause (i) this is a standard liberty provision permitting owners to comply with orders, advice or recommendations given by competent authorities as to sailing or routeing to an Affected Area.

Sub-clause (j) provides that the exercise of any rights under the clause is not a contractual or geographic deviation or off-hire event, and also addresses conflict between the clause and underlying charter party.

Sub-clause (k) holds charterers responsible for any post contractual costs, such as cleaning, quarantining and fumigation, arising from the vessel’s trading during the currency of the charter party. According to the circumstances of the contract and relationship with charterers, owners should consider the appropriateness of ensuring financial security or guarantees to cover expenses that might arise after redelivery. 

Sub-clause (l) this is the standard incorporation provision.

2. Voyage Charter Party Clause

Sub-clause (a) the definitions are the same as those used in the time charter clause.

Sub-clause (b) owners’ option not to proceed with the voyage applies only if a place becomes an Affected Area after the date of entering into the charter party.

Sub-clause (c) this reflects the approach in VOYWAR and gives owners the option, prior to loading, to cancel the contract; refuse to perform any part of it that will bring the vessel into an Affected Area; or, if loading has started, to leave with cargo on board and complete elsewhere for owners’ account. However, if the charter party provides a range of ports, owners must first request charterers to nominate an alternative loading port and may cancel the contract or depart only if charterers fail to respond within 48 hours.

Sub-clause (d) addresses the position before or after arrival at the discharging port. As with VOYWAR, owners may request nomination of an alternative port in the charter party range with the right to discharge for owners’ convenience in the absence of the required nomination within 48 hours, and may recover certain additional costs and freight from charterers.

Sub-clause (e) owners are not required to sign, and charterers may not authorise, bills of lading and other documentation for Affected Areas.

Sub-clause (f) mirrors the principles in the time charter clause (see sub-clause (h)) where a vessel proceeds to an Affected Area. Under Sub-paragraph (iii), any time lost
counts as laytime or time on demurrage. 

Sub-clauses (g) to (j) are all standard provisions.

Originally published in BIMCO Special Circular No. 3, 16 January 2015 - BIMCO Infectious or Contagious Diseases Clause for Voyage and Time Charter Parties